Is Bozeman's Housing Market Still Good for Investment?

Bozeman’s housing market has begun to cool this fall with more inventory and fewer buyers pulling the trigger. Median sold prices have leveled off and have been dropping compared to previous years. We are seeing more price reductions and with interest rates still high buyers continue to sit on the sidelines. Does this make it a good time to make an investment in real estate in Bozeman?

Bozeman has been considered a good place for an investment for many years. However, an increase in building has supply catching up with demand. In 2024, there have been over 1,250 rental units that came on the market. The city projects around 1,550 to come on in 2025, and another 3,000 have been submitted to the city for the 2026 - 2030 time frame.* If all of these projects come to fruition, the community will be overbuilt for many years when it comes to apartment-style units.

Many of these new development projects being built are amenity-heavy with pools, gyms, and pet spas. Years ago, finding a housing complex in Bozeman with a swimming pool would have seemed like a crazy idea! This makes it harder for an individual or local investor to compete with.

The increase in supply is putting downward pressure on rental rates in Bozeman. According to Zillow, the median rent in Bozeman is approximately $2,500, depending on the type of unit, which is higher than the national average. However, as more rental units become available, we are seeing a decrease in this number, with the current average around $900 per room. The occupancy rate in Bozeman is about 8%, and with the completion of new projects, many expect this rate to double in the next few years.

At the same time as rental rates are decreasing, building supplies and labor are not getting any cheaper. Property taxes are increasing, as home maintenance such as snow removal, lawn care, etc. This makes investing in a rental property less attractive for many.

WITH ALL OF THIS INFORMATION, IS BOZEMAN STILL A GOOD PLACE FOR AN INVESTMENT? 

No one sees the growth in Bozeman stopping. Big equity groups from out of state continue to invest in Bozeman. They are willing to withstand losses for a few years while the market slows down. However, this shift is impacting local builders, particularly those focused on apartment-style units. The demand for single-family spec homes is declining. Current builders and developers need to think about how to differentiate themselves in this changing landscape. If you can build single-family spec homes, they will likely remain desirable. For multi-family units, offering additional features such as backyards or garages can help compete with the highly amenitized apartments. As new projects emerge, standing out in the crowded housing market will be crucial for investors and developers.

Click here to see investment properties currently for sale in the Bozeman area. 
(*Data is from a local developer's roundtable discussion)